AN EMPIRICAL STUDY OF INVESTOR BEHAVIOUR IN STOCK MARKET

Abstract

The Indian stock market is the oldest stock market in Asia. The individual investor plays an important role in the stock market because a big share of his savings is invested in the country. Behavioral finance considers attempt to understand how emotions and cognitive errors influence individual investors’ behaviour. The study attempts to understand the behaviour of individual investors in Indian stock market, specifically their attitude and perception with respect to the stock market. The objective is also to identify the preferred source of information influencing investment decision and to assess the psychology of investors. The research carried out is descriptive in nature. A survey was conducted to attain the objectives of the paper. The sample comprises of 100 equity investors in Chandigarh. From the study it can be concluded that most investors put the past trends of stocks under consideration for making an investment decision.  On majority of the investors, friends and family had the primary influence for the purpose of decision making. Most investors disagreed that one should follow the crowd. Much of herding behavior has not been found among respondents. The investors tend to consider the price changes of stock that they want to invest in. Investors give a lot of importance to market information for stock investment. Investors are opportunity seekers. They behave in a way which would increase their prospects of having gains. Prevalence of heuristics for making investment decisions was not much among the sample.

Keywords: Stock Market, Investor Behaviour, Indian Stock Market.